A letter dated November 8th, 2021, from 20 Senators was sent to Secretary of the Treasury, Janet Yellen, (Secretary) requesting the granting of LIFO relief under Internal Revenue Code (IRC) section 473 because of the inventory shortages that have resulted from the pandemic and subsequent supply chain disruptions. A separate letter dated November 9th, 2021, from 91 members of the House of Representatives was also sent to the Secretary requesting the same relief.
Relief under IRC section 473 requires the Secretary to publish notice of such relief in the Federal Register. Eligible taxpayers that elect to utilize the relief would generally have up to 3 years to replace inventory related to qualified liquidations of LIFO inventories.
It is unknown at the time this alert was published what, if any action, the Secretary will take in response to these letters.
A copy of the Senate letter can be found here: LINK.
A copy of the House of Representatives letter can be found here: LINK.
For additional information on the potential impact a decrease in inventory may have on your LIFO reserve, you can reference this prior DHG article.
DHG will continue to monitor the situation and is prepared to help you address LIFO recapture as it affects you and your dealership. For questions or more information, reach out to us at email@example.com.